Yangzhou Yangjie Electronic Technology Co., Ltd. Feasibility Analysis Report on Hedging Business Operations
I. Objectives of Hedging Business Operations
(I) Foreign Exchange Hedging Business With the deepening of Yangzhou Yangjie Electronic Technology Co., Ltd.'s ("Company") internationalization strategy, its overseas business scale continues to expand, and the demand for cross-border receipts and payments and foreign currency settlement has grown significantly. To effectively prevent exchange rate fluctuation risks and enhance financial stability, based on the experience gained from previous foreign exchange hedging operations and in conjunction with actual business development needs, the Company and its subsidiaries plan to conduct foreign exchange hedging business to better ensure the stability of the Company's operating results and protect the interests of the Company and all shareholders.
(II) Commodity Hedging Business To effectively prevent market risks arising from fluctuations in bulk commodity prices and mitigate the impact of raw material price volatility on the Company's normal operations, the Company and its subsidiaries plan to conduct commodity hedging business to effectively manage the risks of raw material price fluctuations, thereby enhancing the stability and sustainability of the Company's operating performance.
II. Basic Information on Hedging Business Operations
(I) Transaction Amount Based on asset scale and business needs, the foreign exchange and commodity hedging business planned by the Company and its subsidiaries will not exceed RMB 3.6 billion or its equivalent in other foreign currencies in the highest contract value held on any single trading day. The estimated amount of transaction margin and premiums to be used will not exceed RMB 600 million or its equivalent in other foreign currencies. The aforementioned limits can be used on a revolving basis within the approval period, and the contract value, margin, and premium amounts held at any point in time will not exceed the approved limits.
(II) Transaction Methods
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Foreign Exchange Hedging Business The foreign exchange hedging business planned by the Company and its subsidiaries includes, but is not limited to, forward foreign exchange settlement and sales, foreign exchange swaps, foreign exchange futures, and foreign exchange options. The counterparties will be domestic and international financial institutions with qualifications for derivative trading business, sound operations, and good credit standing.
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Commodity Hedging Business The commodity hedging business transactions planned by the Company and its subsidiaries will be limited to derivatives such as options, futures, and forwards related to raw materials like copper, which are directly linked to the Company's and its subsidiaries' production and operations. Trading venues will include regulated public trading platforms such as the Shanghai Futures Exchange and the Guangzhou Futures Exchange.
(III) Transaction Period The authorization period will be valid for 12 months from the date of approval by the Company's Board of Directors. If the duration of a single transaction exceeds the authorization period, the authorization period will be automatically extended until the termination of that single transaction.